An investment fund for hotels

by Leon Gettler

Elanor Investment Group, with the backing of former Macquarie chief Bill Moss, is planning to build a presence investing in the Australian hotel industry.

It is now raising $50 million for a new fund to sink into six hotels including the Peppers Cradle Mountain Lodge in Tasmania.

It plans to have the new fund to be worth $200 million by the end of 2017.

The Elanor Hospitality and Accommodation Fund is forecasting a distribution yield of about 13.7 per cent per year, targeting a particular part of the hotel sector,

Its strategy is based around basic market fundamentals of more foreign investment in the Australian tourism sector, rising asset values and well-selected hotels.

And there is no doubt the kind of foreign investment Elanor is targeting is growing. In 2015, there were $3.87 billion of hotel sales across more than 80 transactions in 2015 including the sale of flagship luxury hotels such as the Westin Sydney and Sydney Hilton to Asian interests. 

Using a $52-million facility from the Commonwealth Bank of Australia to finance the purchase of the six hotels, the fund is looking at two seed assets including the $39 million Peppers Cradle Mountain Lodge in Tasmania and the Mantra at Wollongong,

The four other acquisitions will include Best Western Port Macquarie, Best Western Tall Trees in Canberra, Mantra Pavilion in Wagga Wagga and the Parklands Resort in Mudgee, NSW.

"The manager intends to make further acquisitions of additional high investment quality hotel assets. Subject to the availability of quality assets, further acquisitions will be made over the initial investment period, being the first 18 months of the fund," says the fund’s information memorandum.

Cradle Coast Authority regional tourism manager Ian Waller told The Advocate he wasn't surprised investors are now looking at Tasmania as an investment opportunity in tourism and hospitality.

He said Cradle Mountain sat at the "top of the tree" for any investor.

26th February 2016